By Haddon Libby

The financial markets in 2018 have proven that the casual investor is at a significant disadvantage to professionals.  Whether investing in the stock markets or the unregulated world of cryptocurrencies, casual investors are at a distinct disadvantage to the people who work in those markets every day.

To help you to avoid being the dumb money that professionals feed upon, read on…

Starting with Bitcoin, this cryptocurrency was trading at $6,468 on February 6th, losing two-thirds of its December 6th value yet six times higher than its $1,052 price of one year ago.  As you probably know, Bitcoin is a cryptocurrency that is actively used by bad actors around the world.  By bad actors, I am not referring to William Shatner, Chuck Norris or Rob Schneider, but people who intentionally evade the law such as North Korea, people on the DarkWeb and Russia.  Think of Bitcoin like Vegas without the fun where the house typically wins.


The stock market is far different but equally challenging to the casual investor.  Despite an 8.5% decline in the Dow Jones Industrial Average over the last week, this index is still 20% higher than it was this time last year.

If you are one of those people who avoid the stock market and keep your money in cash or certificates of deposit, the purchasing power of your money declines every year.   As the government prints money every day, the dollar in your pocket is worth less tomorrow than it is worth.  Face it – those “high interest” accounts at banks must refer to cannabis as you would have to be pretty out of it to think that 1% is a lot.

Most people invest via mutual funds in their 401k plans at work, exchanged traded funds or stocks.  When investing using mutual funds, remember that many funds hide lots of charges that are hard for you to find.  While 1% may not be a lot for a bank to pay in interest, paying as little as an extra 0.60% in fees each year translates into five years of lost retirement income over the course of a lifetime.  As such, go with low-cost index funds that have a history of matching market returns.  When it comes to which funds to hold, try and find an investment advisor who is also a fiduciary as they must always put your interests first or risk getting in trouble with regulators.  As investment advisor who are fiduciaries are nearly as common as unicorns, drop me an email at the address below and I will help you find one.  Also, never buy an annuity as there are almost always better, less expensive investment options.

When investing in stocks, read the research reports offered as part of most investment accounts before buying a stock.  You will find that these reports give some guidance on the potential future value of that stock that you are thinking of buying.  Independent research by Morningstar or Standard & Poor’s, are two quality research firms.  Sources like and many brokerage houses are often too optimistic making their advice less valuable.   When investing, remember to avoid companies with lots of debt as they often have trouble competing with their less levered rivals.  Remember to diversify across many industries while limiting your exposure to any company to no more than 5%.  Also, never invest in penny stocks (those under $5/share).

While these tips are hardly enough to protect you from all the nefarious characters out there, these simple rules of thumb should help you in avoiding the worst offenders.  If you cannot invest the time to do your research, hire someone who will do it for you.

Haddon Libby is the Founder and Managing Partner of Winslow Drake Investment Management.  He can be reached at  For more information, please visit